Consider the ordinary and compensated demand curves for a normal good. If the price of the good falls, then
a. the ordinary demand curve will show the larger increase in quantity demanded.
b. the compensated demand curve will show the larger increase in quantity demanded.
c. the increase in quantity demanded will be the same for the ordinary and compensated demand curves.
d. we cannot predict whether ordinary or compensated demand will show the larger response in quantity demanded.
a. the ordinary demand curve will show the larger increase in quantity demanded.
You might also like to view...
When the price level is rising at ______ and the real interest rate is 1 per-cent a year, the nominal interest rate is 3 percent a year
A. 4 percent a year B. 3 percent a year C. 2 percent a year D. 1 percent a year
What happens in the long run if firms in a monopolistically competitive industry are earning positive economic profits? Explain
What will be an ideal response?